Rules 92 to 96 of the Draft Income-tax Rules, 2026 outline limitations and extensions of the safe harbour regime. Rule 92 excludes the applicability of safe harbour provisions (Rules 86 to 91) for eligible international transactions entered into with associated enterprises located in countries or territories notified under section 176 or in no-tax or low-tax jurisdictions. Rule 93 bars an assessee from invoking the Mutual Agreement Procedure (MAP) under a tax treaty where the transfer price declared has been accepted under the safe harbour provisions. Rules 94 to 96 introduce safe harbour rules for specified domestic transactions. Rule 94 defines “Appropriate Commission” under the Electricity Act, 2003 and “Government company” under the Companies Act, 2013. Rule 95 defines “eligible assessee” as a Government company engaged in electricity generation, supply, transmission or distribution, or a co-operative society engaged in procuring and marketing milk and milk products, provided a valid safe harbour option is exercised. Rule 96 specifies eligible domestic transactions as supply, transmission or wheeling of electricity, and purchase of milk or milk products by a co-operative society from its members.
Extract of Rule No. 92, 93, 94 and 95, 96 of Draft Income-tax Rules, 2026
Rule 92
Safe harbour rules for international transactions not to apply in certain cases.
Nothing contained in rules 86, 87, 88, 89, 90 or 91 shall apply in respect of eligible international transactions entered into with an associated enterprise located in any country or territory notified under section 176 or in a no tax or low tax country or territory.
Rule 93
Mutual Agreement Procedure not to apply where Safe harbour for international transactions is accepted.
Where transfer price in relation to an eligible international transaction declared by an eligible assessee is accepted by the income-tax authorities under section 167, the assessee shall not be entitled to invoke mutual agreement procedure under an agreement for avoidance of double taxation entered into with a country or specified territory outside India as referred to under section 159.
Rule 94
Definitions for safe harbour rules for specified domestic transaction.
For the purposes of this rule and rules 95 to 98, —
(a) “Appropriate Commission” shall have the same meaning as assigned to it in section 2(4) of the Electricity Act, 2003 (36 of 2003);
(b) “Government company” shall have the same meaning as assigned to it in section 2(45) of the Companies Act, 2013 (18 of 2013).
Rule 95
Eligible assessee for safe harbour rules for specified domestic transactions.
The “eligible assessee” means a person who has exercised a valid option for application of safe harbour rules in accordance with the provisions of rule 97, and —
(a) is a Government company engaged in the business of generation, supply, transmission or distribution of electricity; or
(b) is a co-operative society engaged in the business of procuring and marketing milk and milk products.
Rule 96
Eligible specified domestic transaction for safe harbour.
The “eligible specified domestic transaction” means a specified domestic transaction undertaken by an eligible assessee and which comprises of: —
(a) supply of electricity; or
(b) transmission of electricity; or
(c) wheeling of electricity; or
(d) purchase of milk or milk products by a co-operative society from its members.
